Question 1
14 marks
Compound interest, savings plan and an arithmetic sequence
- Number and algebra
(a)
3 marks
- Interest is added monthly, so use periods a year for years: periods in all.
- Enter it in the finance app (N = 36, I% = 2.3, PV = −14500, PMT = 0, P/Y = C/Y = 12) or use the compound interest formula.
- Round to two decimal places, as the paper asks.
Mentor tip
Keep the signs consistent in the finance app: money you pay in (PV) is negative, so FV comes out positive.
(b)
3 marks
- Your answer to (a) becomes the new starting value, and the monthly deposit goes in as PMT.
- Two years of monthly payments means periods. Payments are at the end of each month, so leave the app in its default (end) mode.
Mentor tip
PV and PMT are both money going into the account, so give them the same sign.
(c)
5 marks
(i) The common difference is . Write and simplify to the form .
(ii) Put into your formula.
(iii) Give one clear reason the straight-line model breaks down, for example that it gives a negative price for cars older than about years, while a real car always keeps some scrap value. Another good answer: cars of the same age can differ in price because of mileage or service history, which the formula ignores.
Mentor tip
For (iii), say how the model fails for some values of . Just writing “condition of the car” is too vague, because it does not explain why the price would change for the same age.
(d)
3 marks
- Newer cars cost more, so the youngest car she can afford is the first one priced at or below her balance of .
- Solve : this gives , so the youngest affordable car is years old.
- Subtract its price from the balance.
Mentor tip
Age must be a whole number, so round up, not to the nearest integer: a -year-old car costs , which is more than she has.

